Abrasive Trends – Growth Factors Driving the Chinese Abrasives Market

Over the next four years to 2013, the general trend for the Chinese abrasives industry will be one of increased consumption as China continues to experience positive growth in most major industrial sectors.

In the latest quarter of 2010, China’s Gross Domestic Product (GDP) expanded an annual rate of 10.3% according to the World Bank. This was a reduction on the 11.9% experienced in the previous years and the slower growth rate is widely recognised as being a positive result of the government’s effort to control the economy to avoid overheating.

China’s industrial output for June also signaled tempered growth. Production rose 13.7 percent last month compared with the same month last year. That was down from a 16.5 percent increase in May over May 2009.

China now has the second largest economy in the world after that of the US. With its strong export growth driving by a growing domestic demand for cars and other consumer products, this is helping to support a positive growth in industrial production.

Car market leads the world

China has also become the largest market for cars. In excess of 13 million vehicles were sold in China last year – both passenger and commercial – a rise of nearly 50% on the previous year according to the latest statistics. The expansion of this market is set to continue. Geely bought Volvo from Ford in December last year for £1.2 bn making it the largest overseas purchase by a Chinese car manufacture. While Volvo will be headquartered in Sweden, significant manufacturing is expected to take place in China, making Volvos for the growing number of middle class Chinese consumers. Geely says it expects annual sales in China to total 400,000 this year.

Power generation is always recognised as an indicator of the country’s economic vitality. Recent figures from the China Electricity Council suggest that electricity demand may slow to about 5% in the second half of 2010 compared to the early part of the year as a result of curbs on energy-intensive and polluting industries, cutting investment in power plants. Electricity consumption may rise about 12 percent to 4.1 trillion kilowatt-hours this year while demand gained 22 percent in the first six months on increased factory use though industrial production cooled more than forecast in June as already mentioned.

China currently consumes about 20% of the world’s abrasives. Taking 2008, as a base, and not taking into account any stockpiling (Table 1) the main abrasive materials markets in China are metallic abrasives and fused aluminium oxide and in comparision with these two materials, the use of supermaterials is almost negligible. According to “Abrasives (grains, bonded, coated and superabrasives) a global strategic report” published in 2009, the annual average growth for abrasives in China will be around 3.8% to 2012 through figures do vary considerably year on year and the effect of government policies including rationalisation of steel making are likely to have an impact.

Please note: The data contained in this article has been sourced with permission from “Abrasives (grains, bonded, coated and superabrasives) a global strategic report”. The full report is available from intelligence-market.com